Can I Short Sale My Carmichael Home?

It's not unusual for someone that bought their Carmichael home from about five years ago to call and ask me about doing a short sale. We all know that Carmichael has traditionally held its value in real estate. While I might be a little biased because I've lived and worked in the Carmichael community for nearly 30 years is beside the point.  Carmichael really does hold its value when compared to other towns.

That said, what happens if you bought a house and you now owe a whole lot more then it's worth, and that you know you will never balance out? Unfortunately, this is happening to many of us, and fortunately, we have options.

Most lenders ask to see some sort of "hardship" in order to approve a short sale on your Carmichael home. A hardship, traditionally, has been about loss in wages, divorce, illness, etc., but more and more, we are seeing lenders approve short sales based on the very fact that the homeowners will always be underwater with the debt owed on their home.

Another consideration is the lender. Some lenders are easier to work with in approving short sales then others. Additionally, many of us took out home equity lines of credit when the housing boom was in full force. How much you owe on your second loan, and which lender it is with, will also play a role in whether or not a short sale is a viable option for you.

Please keep in mind that there are many people that owe more than their home is worth and that it doesn't always mean you should sell your home. My home, for instance, has lost value too and I owe more on it then it is worth. However, I didn't buy my house in the boom years, so the difference in value and amount owed are not that enormous and I am confident that in the next several years, as the market slowly climbs upward, that the balance owed and value will even out. Besides, I love my Carmichael home!

If you love your Carmichael home and you can manage to keeping making payments, then there may be no reason to consider a short sale. However, if you owe a substantial amount versus the current value or  if payments are becoming a burden, a short sale may be one option for you to consider.

Finally, I do want to mention loan modifications. While I continue to hope that federal regulations will make loan modifications more home owner friendly, what we are seeing now isn't necessarily a solution.

Some lenders, some times, are adjusting house payments for borrowers up to $300. Unfortunately, the success rate is very, very low. In more cases then not, the lenders will either refues the loan mod, process it at an amount that really doesn't make a difference, or, add the difference in the new payment to the back-end of the loan, which will then be added to the principle. 

It's also important to watch out for companies who charge upfront for a loan modification. You should not have to pay to have your loan modified. In fact, just contact your lender and ask how to start the process. In a future article I will tell you the documents you will need for both a loan modification or short sale application.

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Tamara Dorris is a Carmichael-based Realtor.

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